In the face of Pyongyang's furious protest, the Seoul government indicated it would return to "quiet diplomacy" on North Korean refugees, but it has triggered criticism by human rights activists at home.
Concerns are growing that the hard-won inter-Korean reconciliation process may lose steam as North Korea remains reluctant to resume stalled cross-border talks.
On Tuesday, North Korea's government and official media heightened rhetorical attacks against South Korean authorities, dismissing Seoul's calls for the resumption of reconciliation talks.
In a departure from its long-standing low-key stance toward the North Korean refugees issue, the South Korean government reached out last month to rescue hundreds of North Koreans who were stranded in an Asian nation after fleeing their communist homeland.
The Seoul authorities secretly organized the airlift of the North Korean refugees on July 27-28 from the country that activists said was Vietnam. The arrival of 468 North Korean defectors in two groups was the single largest group allowed to take asylum in the South.
But Seoul's granting sanctuary to the North Korean refugees has angered North Korea, which considers it as a U.S.-backed scheme to "overturn our system of socialism."
In a display of anger over the South's refugee operation, Pyongyang has frozen all kinds of cross-border dialogue channels, including civilian contacts.
The two nations failed to stage a planned joint meeting to mark the their Aug. 15, 1945 liberation from Japanese colonial rule, which has been held every year since the historic Korean summit in 2000.
Pyongyang has already boycotted a planned round of high-level talks with Seoul earlier this month aimed at reviewing cross-border reconciliation efforts and discuss cooperation projects under the 2000 summit agreement. Inter-Korean military talks have been also stalled since last month.
North Korea has said South Korean authorities would be held responsible for "grave consequences" for trying to undermine ties between the two Koreas, accusing the South of "planned kidnapping," referring to the mass defection.
North Korea has also ruled out attending proposed six-nation working-level talks on its nuclear arms program and has questioned the entire negotiating process, blaming hostile U.S. policy for tougher stance against Pyongyang.
It is "strange to discuss the nuclear issue" at a time when the United States steps up its political offensive and strengthens its anti-Pyongyang policy, the North's Foreign Ministry said on Monday.
Washington has "destroyed itself the foundation for the talks, making it impossible for the DPRK (North Korea) to go to the forthcoming meeting of the working group," it said. "The U.S.'s true intention is not to seek a final settlement of the nuclear issue, but to stifle the DPRK."
North Korea is even threatening "retaliatory terror" against South Koreans, according to Seoul's intelligence agency. In a rare public advisory on Monday, the National Intelligence Service warned South Korean citizens in China and Southeast Asia, along with activists helping North Korean defectors abroad, to be on their guard.
"North Korea is threatening our country with terrorism in retaliation," the spy agency said in its statement. "We are advising heightened vigilance in view of the refugees' arrival and the North's reaction to it," it said. The possible attacks may be in retaliation for the recent airlift of a large group of North Korean refugees, the agency said.
Following the North's furious response, South Korea's chief security policymaker, Unification Minister Chung Dong-young, expressed regret over the stalled inter-Korean dialogue and cooperation process, calling for the North to return to reconciliation talks.
"It's regrettable that North Korea misunderstood an array of issues such as the mass transportation of North Korea defectors (to Seoul), which brought Cabinet-level inter-Korean talks to a temporary halt," Chung told reporters.
"Despite the halt of governmental talks, inter-Korean economic cooperation programs continue, and the suspension is not developing into tension, as we observed in the joint march by the two Koreas' athletes in the Athens Olympics," he said.
Chung also asked local civic groups to abstain from promoting the defection of North Koreans to the South, saying that doing so could negatively affect inter-Korean relations.
Chung and other officials hinted that it would change its policy and not to allow North Korean defectors to come to South Korea.
Foreign Minister Ban Ki-moon said it was unreasonable to shift responsibility to the government when something went wrong with the nongovernmental organizations' handling of North Korean defectors.
"It is difficult for the government's diplomatic officials to limitlessly take responsibility for North Korean defectors who roam around China and enter neighboring countries," Ban was quoted as saying by his spokesman.
But South Korea's human right groups called on Tuesday for the two ministers to apologize for their comments about the North Korean refugees.
"The comments of the foreign and unification ministers have affected our reputation to help North Korean defectors. We have worked for them for a long time without complaints," the Network for Democracy in North Korea said in statement. "Those words defamed our groups, which have worked on the defector problem while the South Korean government has done little," it said.
South Korea had maintained low-key publicity on the defection in a bid to avoid angering North Korea, while seeking "silent" solutions. But a recent spate of North Koreans has put Seoul under growing pressure to shift its policy from seeking "silent" solutions to dealing with the issue more actively, which forced it to organize last month's airlift of North Korean refugees.
More than 5,000 North Koreans have defected to South Korea since the 1950-53 Korean War that ended in a truce, not a peace treaty. Last year, the number of defectors arriving in the South reached 1,285, up from 1,140 in 2002 and 583 in 2001.
Their border remains sealed and heavily guarded by nearly 2 million troops on both sides.